MicroStrategy says it may sell Bitcoin to pay off long-term debt obligations
MicroStrategy indicated that it could sell some of its Bitcoin (BTC) holdings to finance its long-term debt obligations totaling $2.208 billion, the principal of which matures by 2025.
According to the May 1 filing, MicroStrategy has long-term cash requirements for obligations related to operating leases, transition taxes and various purchase agreements. The firm added:
“We have principal due at maturity of our long-term debt instruments totaling $2.208 billion in addition to $2.4 million in coupon interest due semi-annually for the 2025 convertible notes, $15.3 million in coupon interest due semi-annually. the period for 2028 Secured Notes, and $0.1 million due monthly in principal and interest related to our other long-term secured debt.”
The business intelligence platform said it does not expect cash and equivalents generated by its business analytics software to be sufficient to satisfy those debt obligations.
Because of this, the firm said it would explore different options, which include borrowing against BTC or outright selling some of its holdings.
Other options available to the firm include refinancing the debt obligations, raising cash from other sources such as issuing and selling shares of Class A stock, or even settling the obligations into convertible bonds under certain unnamed conditions.
In December 2022, MicroStrategy sold some of its BTC holdings for the first time since it started accumulating. At the time, the company said it was selling the assets to generate tax benefits.
However, it has since gone on an accumulation spree this year. During the first quarter, it bought 7,500 BTC, pushing its total Bitcoin holdings to 140,000 BTC – more than bankrupt crypto exchange Mt. Gox.
Meanwhile, MicroStrategy’s BTC acquisition approach has lured several traditional financial institutions to buy the shares to gain indirect exposure to the flagship digital asset. According to chairman Michael Saylor, the company the shares have risen up 166% since it adopted the BTC standard in 2020 – outperforming other assets such as Gold, Nasdaq, S&P 500, etc.
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